UAE's Aldar Properties creates new subsidiary with $5.4 bln assets
(Adds paragraph on debt transfer to new subsidiary, IPO option)
By Stanley Carvalho
ABU DHABI, Sept 12 (Reuters) - Abu Dhabi's largest developer
Aldar Properties is spinning off its recurring-revenue
assets worth 20 billion dirhams ($5.4 billion) into a new,
fully-owned subsidiary as it seeks to achieve operational
efficiencies and raise cheaper capital.
The state-linked builder of Abu Dhabi's Formula One circuit
said on Wednesday the subsidiary, Aldar Investment Properties
LLC, will take ownership of some of Aldar's highest
The new company follows the recent Abu Dhabi decree granting
full onshore real estate ownership rights to Aldar Properties
and its subsidiaries in the capital of the United Arab Emirates.
"It's an evolution that brings a new degree of operating
capital efficiency. And by focusing (on) our recurring revenue
assets legally and financially, we can raise capital cheaper,”
Greg Fewer, chief financial officer, Aldar Properties told
Aldar Investments has been assigned a Baa1 rating by
Moody's, a notch above Aldar's, and plans to issue new,
benchmark sukuk, or Islamic bonds, shortly, he said.
Aldar Properties has hired banks to arrange a U.S.
dollar-denominated sukuk issue of at least $750 million, sources
told Reuters on Monday.
"The new sukuk will be linked to the existing sukuk," Fewer
said, without elaborating further.
Fewer told reporters at a press event on Wednesday that
Aldar Properties will move its existing debt to the new
subsidiary. Shares in the new entity could be sold through an
initial public offering in the future, he added.
Aldar could emulate what Dubai's Emaar Properties
did with the listing of Emaar Malls in 2014, said Ayub
Ansari, senior analyst at SICO Bank in Bahrain.
"Typically in a spin-off, the company is looking for an IPO
(initial public offering), aiming for better value. You also
have immediate cash flow for the parent i.e. Aldar Properties."
Aldar Investments will have its own board. The existing
asset management team of Aldar Properties will be part of the
new subsidiary, he said.
Aldar Investments, incorporated at Abu Dhabi Global Market
(ADGM), the financial free zone of the emirate, will also
actively assess opportunities to expand its asset base beyond
traditional real estate asset classes.
Aldar's shares were down 1 percent on Wednesday. The stock
is trading below its fundamental value given weak sentiment in
the market, SICO's Ansari said.
(Reporting by Stanley Carvalho, Editing by Saeed Azhar and
First Published: 2018-09-12 08:58:32
Updated 2018-09-12 11:14:39
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